The country's largest carmaker Maruti Suzuki India on January 28 reported a 5.1 percent year-on-year increase in third quarter (October-December) profit despite lower tax cost, dented by lower other income, higher sales promotion expenses and depreciation.
The company’s profit during the quarter increased to Rs 1,564.8 crore from Rs 1,489.3 crore in the same period last year.
"Profit growth YoY was on account of cost reduction efforts, lower operating expenses, lower commodity prices and reduction in corporate tax rate, partially offset by higher sales promotion expenses, higher depreciation, and lower fair value gains on invested surplus," Maruti said in a BSE filing.
Revenue from operations grew by 5.3 percent year-on-year to Rs 20,707 crore in the quarter, with total vehicles sales growth at 2 percent.
Realisations declined 5.7 percent sequentially to Rs 4.7 lakh per unit during the December quarter.
On the operating front, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 8.9 percent to Rs 2,102 crore and margin maintained at 10 percent level, rising 30bps YoY to 10.1 percent compared to the year-ago period, dented by lower realisation.
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The increase in material cost at 76.3 percent of sales (against 74 percent YoY) also hit operating income.
Overall, numbers missed analyst expectations.
As per CNBC-TV18’s analyst poll, profit was estimated at Rs 1,676 crore on revenue of Rs 21,847 crore and EBITDA was seen at Rs 2,355 crore with margin at 10.7 percent.
"We were not expecting growth, so numbers were broadly in line with estimates as festive season sales were higher but discounts were also very high to boost sales," Amyn Pirani of Yes Securities told CNBC-TV18.
Pirani said the realisation falling to 5.7 percent was a mild disappoint, as he was expecting discounts to go up.
"Even if there is a mild recovery and early rollout of BSVI vehicles than others, it should be in strong position compared to peers, hence we have add rating on the stock. It is a strong market leader. Negative earnings turned positive is a good thing. It is not a top pick but we are more positive than others," Pirani added.
Market expert Prakash Diwan advised buying the stock on dips.
"Maruti Suzuki reported dismal performance in Q3FY20 and was below our estimates on all fronts. Continued weakness in EBITDA margin was a particular disappointment, as was the 5.7 percent QoQ drop in ASPs," ICICI Direct said.
Other income in Q3 degrew by 14.5 percent to Rs 784 crore and tax expenses fell 22.6 percent to Rs 441.6 crore compared to same quarter last year.
The stock was quoting at Rs 7,087.50, down Rs 56.25, or 0.79 percent, on the BSE at 1347 hours.
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